The US Steel Industry in 2004: Still in Need of Protection?

Since the late 1960s, the US steel industry has been asking for protection from imports and subsidies to help alleviate its troubles. And the US government has, in response, enacted various protectionist measures from time to time. In 2001, President George W Bush announced the Steel Program. It consisted of three parts: negotiations with trading partners to eliminate inefficient excess capacity in the steel industry worldwide; negotiations with trading partners to eliminate the distorting practices including subsidies that resulted in excess capacity; and, investigation under Section 201 to determine whether the industry was harmed by low-priced steel imports.

Trade economists argued that these measures would hamper the competitiveness of the industry. The government's protectionist policies would adversely affect market efficiency and innovation in the industry. Imposition of Section 201 tariff measures would increase government intervention in an industry that was already protected, they felt. Statistics show that 80% of steel imports to the US were already subject to tariffs under the US antidumping laws. These laws allowed the government to impose tariffs on steel products that were subsidized by foreign governments and dumped in the US. But in spite of being protected, the industry was struggling.